Professional Documents
Culture Documents
Organizational Design
A process involving decisions about six key elements:
Work specialization
Departmentalization Chain of command Span of control Centralization and decentralization Formalization
Purposes of Organizing
Organizational Structure
Work Specialization
The degree to which tasks in the organization are divided into separate jobs with each step completed by a different person. Overspecialization can result in human diseconomies from boredom, fatigue, stress, poor quality, increased absenteeism, and higher turnover.
Departmentalization by Type
Functional
Grouping jobs by functions performed
Process
Grouping jobs on the basis of product or customer flow
Product
Grouping jobs by product line
Customer
Grouping jobs by type of customer and needs
Geographical
Grouping jobs on the basis of territory or geography
Functional Departmentalization
It is used mainly by smaller firm that offers a limited line of products because it makes efficient use of specialized resources.
Advantages
Efficiencies from putting together similar specialties and people with common skills, knowledge, and orientations
Coordination within functional area In-depth specialization Disadvantages
Geographical Departmentalization
Advantages More effective and efficient handling of specific regional issues that arise Serve needs of unique geographic markets better Disadvantages Duplication of functions Can feel isolated from other organizational areas
Product Departmentalization
+ + +
Allows specialization in particular products and services Managers can become experts in their industry Closer to customers Duplication of functions
Process Departmentalization
+ More efficient flow of work activities Can only be used with certain types of products
Customer Departmentalization
Responsibility
The obligation or expectation to perform.
Unity of Command
The concept that a person should have one boss and should report only to that person.
Skills and abilities of the manager Employee characteristics Characteristics of the work being done Similarity of tasks Physical proximity of subordinates
Organizations in which top managers make all the decisions and lower-level employees simply carry out those orders.
Decentralization
Organizations in which decision-making is pushed down to the managers who are closest to the action.
Employee Empowerment
Increasing the decision-making authority (power) of employees.
More Centralization
Environment is stable.
Lower-level managers are not as capable or experienced at making decisions as upper-level managers.
Lower-level managers do not want to have a say in decisions. Decisions are relatively minor. Organization is facing a crisis or the risk of company failure. Company is large. Effective implementation of company strategies depends on managers retaining say over what happens.
More Decentralization
Environment is complex, uncertain.
Organic Organization
Highly flexible and adaptable structure
High specialization Rigid departmentalization Narrow spans of control High formalization Limited information network (downward) Low decision participation
Non-standardized jobs Fluid team-based structure Little direct supervision Minimal formal rules Open communication network Empowered employees
Contingency Factors
Structural decisions are influenced by:
Overall strategy of the organization
Pursuing competitive advantage through meaningful and unique innovations favors an organic structuring.
Focusing on tightly controlling costs requires a mechanistic structure for the organization. Minimizing risks and maximizing profitability by copying market leaders requires both organic and mechanistic elements in the organizations structure.
Cost minimization
Imitation
Unit production of single units or small batches Mass production of large batches of output Process production in continuous process of outputs
Functional structure
THE BUREAUCRACY
relies on legal authority, logic, and order, and on a division of labor, hierarchical control, promotion by merit with career opportunities for employees, and administration by rule.
Mechanistic Designs
a highly bureaucratic organization that emphasizes vertical specialization and control
The entire organization is made up of work groups or selfmanaged teams of empowered employees.
Specialists from different functional departments are assigned to work on projects led by project managers. Matrix have two managers. In project structures, employees work continuously on projects; moving on to another project as each project is completed.
Matrix
Matrix organizations provide facility to operate when the org has multiple complex and interdependent activities. allow more efficient allocation of specialized skills across the entire business. By taking advantage of the shared services and skills and not having to develop and manage those skills themselves, the divisional or product line organizations can better focus on their core business objectives
An flexible and unstructured organizational design that is intended to break down external barriers between the organization and its customers and suppliers.
Removes internal (horizontal) boundaries:
Eliminates external boundaries: Uses virtual organizational structures to get closer to stakeholders.
Organizational Learning
Learning
Learning occurs through the recognition of differences and the making of connections Learning may be purposeful or unintended
Learning involves more than just the acquisition of informationthe ability to act differently is also necessary.
An Organization
A group of people becomes an organization when the individuals which comprise it develop procedures for: Making decisions in the name of the collective. Delegating to individuals the authority to act for the collective. Setting boundaries between the collective and the rest of the world.
Definitions
"Organizational learning is the intentional use of learning processes at the individual, group, and system level to continuously transform the organization in a direction that is increasingly satisfying to its stakeholders." (Dixon, 1994)
"Learning organizationan organization that is continually expanding its capacity to create its future." (Senge, 1990) A classic expression of the OL can be found in the work of Argyris and Schn on single- and double-loop learning (1978, 1996).